Objective Elliott Wave count of the S&P 500 and updates for oil, gold, bonds and currencies: Tony Caldaro

Folks, Tony Caldaro has issued his weekend update already (and you can always find his daily and weekend updates and additional information and services at his Elliott Wave Lives On website, included in the "other sites of interest" listed at right):

the ELLIOTT WAVE lives on
Market analysis using proprietary Objective Elliott Wave techniques

July 10
weekend update

REVIEW
This week was highlighted by downtrend confirmations in most of the US indices and many foreign ones as well. Of the ten countries we follow only China and Hong Kong remain in uptrends. For the week the SPX/DOW were -1.8%, and the NDX/NAZ were -2.1%. Asian markets were -3.5%, with the largest decline in India (BSE -9.5%), and only China rose (SSEC +0.8%). European markets were -1.9%, and the Commodity equity markets were -4.3%. Bonds gained 1.6%, Crude lost 10.4%, Gold dropped 1.4% and the Euro lost 0.5%. On the economic front again it was a quiet week. ISM services rose, weekly Jobless claims declined, as did the Consumer credit contraction and the Trade deficit. Yet, Consumer sentiment dropped to 64.6% from 70.8%.

LONG TERM: bear market
During the strongest (+289 SPX points), longest (3 months) and best performing (+43%) uptrend of this entire bear market. We heard a lot of media noise about "green shoots", the economy has turned around, and the recession is over. While following all the economic data on a daily basis even before this downturn began. One can agree with the media in one regard. It no longer looks like a recession is underway. It looks more like a depression. International trade has fallen off a cliff. Banks are failing nearly every week. Real unemployment is between 16% and 20%, and some of those that are employed are having their hours cut back and/or taking pay cuts. Housing prices, in some areas, have fallen over 50%. The eight largest economy in the world, California, started the month by issuing over $300 million in IOU's. On top of all this, States have been raising fees and taxes to increase revenue. Also there is word that the government has something similar in the planning stages. Last but not least, the mega banks, which have been the major recipients of cash infusions, asset swaps and loan guarantees, have been building excess cash reserves to astronomical levels. Historically excess cash reserves have been about $20 billion, currently they are over $800 billion. Either the banks have a lot more bad assets than are being reported, and/or the economy is a lot worse than most expect. Dark clouds are still coming over the horizon.

Technically, the stock market continues to look vulnerable to downside surprises. From the Oct 07 bull market high at SPX 1576, to the Mar 09 low at SPX 667, we counted a zigzag (5-3-5) Primary wave A. This was defined by three Major waves: Major A Mar 08 (SPX 1257), Major B May 08 (SPX 1440) and Major C Mar 09 (SPX 667). A few days after the low we anticipated the start of Primary wave B. For three months (Mar- Jun) it had been underway as the SPX rallied to 956, for a 43% gain. This was a bit short of the typical 50% gain often associated with Primary B waves. Nevertheless, nearing the high we counted a completed zigzag pattern and warned of a potential top. Over the past two weeks the major indices SPX/DOW/NDX/NAZ all confirmed new downtrends, affirming that completed pattern. Now that Primary wave B has completed, and Primary wave C is underway we see two potential scenarios unfolding over the next many months. The first would be a five wave pattern down to the Mar 09 lows at SPX 667, to complete an elongated flat. The second would be another extended zigzag pattern breaking through that low and bottoming in 2010 in the neighborhood of SPX 400. It is too early to tell which scenario will unfold. But this remains a treacherous stock market.

MEDIUM TERM: downtrend
Now that the downtrend has been confirmed, a review of the previous downtrends in this bear market is in order. Every downtrend, and there has been seven of them thus far, has taken the form of a impulsive five wave structure. This new downtrend should also exhibit this structure. If not, then the alternate DOW count would come into play. The range of the completed downtrends has been between 139 and 572 points, with the mean between 240 and 253 points. If we apply these last two numbers we arrive at a potential downtrend low between SPX 703 and 716. These levels fall right in line with the OEW long term pivot at SPX 717. Every uptrend and downtrend of this bear market has ended near or at a long term pivot. The recent uptrend ended at the OEW 961 pivot, as it topped at 956. We are going to continue to apply the same labeling pattern as we used during Primary wave A, labeling each trend as an Intermediate wave until the market forces a change. Lastly, it should be noted that every downtrend of this bear market has made a new low. Therefore, we are taking a risk that this downtrend will be the first exception. Keep this in mind as it unfolds.

SHORT TERM
Support for the SPX remains at 848 and then 789, with resistance at 912 and then 935. Short term momentum was slightly oversold at Friday's lows and finished the day at neutral. Thus far from the uptrend high at SPX 956, we're comfortable counting the decline to SPX 889 as Minor wave 1, and the rally to SPX 932 as Minor wave 2. The decline from SPX 932 has made a lower low to SPX 869 signalling that it is indeed Minor wave 3. However, the internal wave structure is not as well defined as of yet. Keep in mind that these downtrends are impulsive looking waves in a bear market, and not the more defined impulse waves of a bull market. Should the SPX rally back to Thursday's high at 888, then we'll label 869 as Minute 1, and 888 or so as Minute 2, of Minor wave 3. If not, we'll just have to continue to track Minor wave 3 as it unfolds. The hourly RSI continues to track the short term moves quite well. Best to your trading!

FOREIGN MARKETS: The Asian markets dropped 3.5% on the week. Most are in downtrends with the exception of China and Hong Kong.
The European markets dropped 1.9% on the week. Both Germany and England are in downtrends.
The Commodity equity markets dropped 4.3% on the week. Both Brazil and Canada are in downtrends.

COMMODITIES: Bonds gained 1.6% for the week as Bond yields continued to decline. Expecting the 10YR to touch just under 3% before ending the downtrend.
Crude dropped 10.4% on the week as its downtrend intensified. It appears to be in a third wave down, similar to the stock markets.
Gold dropped 1.8% on the week. It's downtrend continues, but it appears to be getting close to a completed wave pattern.

CURRENCIES: The Euro (-0.5%) was the only loser on the week as the US Dollar (USD) was flat and the YEN +3.7%. Expecting more upside in the USD.

NEXT WEEK: A busy economic week kicks off on Monday with the Budget deficit at 2:00. Tuesday we have the PPI, Retail sales, and Business inventories. On Wednesday we have CPI, the Empire index, Industrial production and the FOMC minutes. Thursday we have weekly Jobless claims and the Philly FED. Then on Options expiration Friday, Housing starts and Building permits will be released. No speeches yet posted for the FED. Best to your weekend and week.
CHARTS: http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1606987